Modeling aggregate economic risk: An introduction

Abstract

Not only can disasters directly cause immense human suffering and loss, they may also lead to large medium- and long-term indirect microeconomic (household, business level) as well as macroeconomic (nation-wide) consequences. In this second section of the book, we focus on the aggregated or macroeconomic impacts of disasters, which include effects on gross domestic product, consumption, savings, investment and inflation, as well as the reallocation of resources to relief and reconstruction. Based on statistical and model-based analyses, studies have shown that these impacts can be significant in many instances.